Technological Advancement and Economic Growth in Kenya – a Case Study Mobile Money Transfer

Abstract

The performance of Kenya’s economy since independence has remained mixed with both growing and declining periods. The growth momentum over the years has mainly been affected by; internal and external shocks, poor infrastructure, weak institutions, unfavorable weather among other factors. The growth has remained positive except in the year 2000 when the economy registered negative growth of 0.2 percent. It is a key objective of every government the world over to ensure their economies register the high economic growth rates thus contributing to better living standards for its people. There are many factors that influence economic growth of a country including level of infrastructure, political stability, human capital, technology development, weather conditions especially for agriculture dependent economies, commodity prices, interest rates, exchange rates among others.

Technology remains a key ingredient for a country to be able to effectively compete with other countries and achieve high economic growth levels. More advanced economies including USA, Canada, some European countries and some emerging Asian countries have invested enormous resources in Research and Development to be able to come up with advanced technologies and achieve tremendous growth for their economies. Their exports of finished products which fetch higher values from the international market have grown while importing raw primary unprocessed materials especially from LDCs which do not have the technology to process them.

This study looks at the role of technology advancement on economic growth focusing on mobile money transfer technology in Kenya. Since its introduction in Kenya, the technology use has grown to become a major platform for money exchange and trade especially for small amounts and in rural areas due to reliability, safety, reach and convenience.

In the study we will investigate the relationship between economic growth and technological advancement with specific regard to mobile money transfer volumes. The study will use a Cobb Douglas production function using quarterly data for the period January 1999 to December 2012 for Kenya. Secondary data will be analyzed using stata data analysis and statistical software to be used to come up with the research findings. This will assist to offer recommendations to policy makers and entrepreneurs to assist in future planning and resource allocation to research and development and technology so that their investments and economy can achieve the required growth levels going forward